Macro Economy Elements

1258 WordsJun 21, 20116 Pages
1.0 MACRO ENVIRONMENT ELEMENTS There are many factors in the macro-environment that will effect the decisions of the managers of any organization. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. 1.1 Political and Legislation Factors The political-legal dimension of the general environment also affects business activity. The philosophy of the political parties in power influences business practices. The legal environment serves to define what organizations can and cannot do at a particular point in time. Figures 1.1 shows the political and legislative segment of macro environment. Figures 1.1: The political and legislative segment of macro environment…show more content…
Technological changes may create new opportunities for the firm, or threaten the survival of a product, firm, or industry. Technological innovation continues to move at an increasingly rapid rate. Technological change takes two forms: • Pure invention • Process innovation Technology is a major macro-environmental variable which has influenced the development of many of the products we take for granted today, for example, television, calculators, video recorders and desk-top computers. Marketing firms themselves play a part in technological progress, many having their own research department or sponsoring research through universities and other institutions, thus playing a part in innovating new developments and new applications. a) Pure invention Pure invention refers to the creation of something new that is different from existing technology or products. For this reason, invention usually has economic value and has no competitors at initial stages and is often a monopoly by the individual who has the legal right on that invention. But there are disadvantages with inventions because there is no market at the early stage. New inventions can create new markets and opportunities for business, for example, the invention of semiconductors that created business opportunities in computers. b) Process innovation Process innovation refers to the small changes in design, product formulation and manufacturing,
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